Government Raises Tea Prices

The tea industry in Sri Lanka has been going through difficult times recently with a decline in tea exports due to decreased demands from the Middle East, Iran, and Russia.

Total tea exports dropped by 14% in July this year and the island exported tea worth $126.5 million to the US in July compared to $147.2 million in July 2014. And although factories have been receiving funds from government to subsidise payments to smallholder farmers at a minimum of 80 rupees (LKP) per kg, smallholders are often only being paid rupees LKP 65-68.

So, at the end of September, the government brought to an end the guaranteed rupees LKP 80 per kg of fresh green leaf, and, at the beginning of October, Navin Dissanayake, minister of the plantation industry, explained that the government was proposing to buy tea worth rupees LKP 300 million in order to artificially raise the price of tea and reduce the amount of money paid in subsidies. Five million rupees has been allocated to buy tea at rupees LKP 80 a kg.